Finland’s Oma Savings Bank is set to provide the first notable covered bond supply of the week with a EUR250m five year sub-benchmark tomorrow (Wednesday), with risk assets having today bounced back after markets were yesterday volatile on the back of weak economic data.

Following a dovish Fed meeting last Wednesday, economic figures released on Friday prompted an inversion of the US Treasury yield curve for the first time since 2007, while the yield on the 10 year Bund turned negative for the first time since 2016. Equities fell sharply and credit markets were volatile yesterday (Monday) in the wake of the news.

Oma Savings Bank had finished its roadshow on Friday, but yesterday held off following this up with any further announcement because of the market conditions, according to a syndicate banker at one of mandated leads Danske, LBBW and OP.

“Not only because of the recent Brexit headlines, but also growth concerns weighing on sentiment, we had fairly volatile market conditions and thought that on such a Monday morning we might not get the relevant attention we need,” he said.

The issuer and its leads therefore held off until this (Tuesday) morning to announce a EUR250m deal with an expected maturity of five years to be launched as early as tomorrow, subject to market conditions.

“This was probably not the worst idea as markets look a bit more stable, with the recent news priced in,” added the lead banker, “so we could go on working with accounts.”

He said investors had expressed a preference for a five year and the main question will be choosing the right starting point for pricing. Two recent Finnish sub-benchmark issues experienced contrasting receptions, with a EUR300m seven year for the Mortgage Society of Finland being twice-subscribed and tightened from 19bp to 15bp over mid-swaps on 6 March, while a EUR300m five year from Alandsbanken was only just subscribed and priced in the middle of guidance, at 13bp over.

The Alandsbanken five year issue was this morning quoted at 12.5bp, mid, according to pre-announcement comparables circulated by the leads, while the Mortgage Society’s seven year was seen at 13.5bp and its June 2024 paper at 10.5bp. Oma Savings Bank December 2022 paper was quoted at 6.5bp over.

A syndicate banker away from the leads said that – barring any major surprises – market conditions should be accommodating tomorrow for any covered bond issuance, with the primary market increasingly immune from wider events, as recently demonstrated by the resilience of UK issuance to Brexit headlines. He said a Lloyds EUR1.5bn five year deal sold on Monday of last week (18 March) continues to perform in spite of more negative news out of the UK in recent days, being quoted at 15bp over today after being re-offered at 18bp.